Renovating a rental property makes sense for many reasons. Those improvements you’re making will increase your rental value, allowing you to earn more every month when your tenants pay rent. You’ll also drive up your property value, which means the home is worth more when you decide to sell it later.
Rental property renovations also attract high quality tenants. You’ll face shorter vacancy periods and you’ll place reliable renters who can be trusted to take care of your home.
You know that cost-effective renovations are a good idea, but when should you make them?
The right time is not always going to be the necessary time. When an appliance breaks down, you have to replace it. Maybe that will inspire you to give all of your appliances an upgrade.
Outside of desperate necessity, we’ve identified three opportune times to make investment property renovations. Here’s what we suggest.
Renovate Before You List Your Property
As you’re preparing your property for the rental market, you want to think about both functionality and aesthetics. When tenants come to see the home, they’ll need to walk through a property where everything works. Make any repairs and take care of any necessary maintenance.
Those renovations are more about aesthetics and appeal. Once you know everything in the property is working, think about how everything looks. Consider how it will make prospective tenants feel.
The renovations you make before you begin marketing your rental home should focus on creating an emotional connection with prospective tenants. You want them to feel like they could move right into the property and turn it into a home.
This is where you want to:
Provide a fresh coat of paint. Don’t bother with touching up spaces on the walls that need a lift. Instead, paint entire walls. It will give your rental home a dramatic, modern look and feel.
Clean the carpets professionally. Previous tenants may have had pets and those odors are hard to remove. Get a full steam-clean if you have carpet. If you have hard surface flooring, make sure they’re scrubbed and polished. Don’t forget the baseboards.
Update the small fixtures that are minor but make a difference. New drawer pulls. Shiny faucets. Some backsplash tile in the kitchen. These are attention-grabbing renovations, and they don’t cost a lot.
The property you’re renting out has to look its best when you’re trying to market to tenants. Make any renovations you can afford. You’ll have a competitive advantage on all the other San Diego rental homes on the market.
Renovate During Tenant Turnovers
Making the right renovations before you list a home will reduce vacancy and attract good tenants.
The same rule applies during turnovers.
When one tenant moves out, you need to work quickly to make the property ready for the next tenant. You might want to skip over the renovations and the updates. Your goal may simply be to clean the place up and begin looking for that next lease agreement.
Spend a little extra time making those renovations, however. You’re going to be maintaining and cleaning the property anyway. Renovations are essential during the turnover period. You’re hoping to charge more rent than you did during the last tenancy. Therefore, your home has to reflect its higher rental value.
When you’re making replacements, consider the opportunity you have for upgrades and renovations. A good example is flooring. Maybe you’ll want to clean the carpets or even rip up the existing carpet to put in new carpet. That’s a renovation.
An even better renovation is pulling up that old carpet and installing hard surface floors instead of new carpet.
There are a lot of benefits to this. Hard surface flooring is cleaner and easier to maintain. It provides a longer lifespan for you. Tenants generally prefer it. You don’t have to spend thousands of dollars on hardwood bamboo floors. The laminates and faux woods are attractive and affordable. You can do tile or vinyl. There are plenty of options to renovate in this way, and you’ll be happy with the results.
During the turnover period, make renovations that will justify a higher rental value and help you find well-qualified tenants. You can work quickly through these upgrades when you have a reliable team of vendors and contractors to help you. Work with San Diego property management partners if you don’t have the resources and you’re not sure how to get the work done.
Renovate to Incentivize Lease Renewals
At the end of a lease term, you’re always hoping to hold onto your best tenants. You don’t want to see them go, even if it means you have an opportunity to renovate your property and earn higher rents with a new tenant.
Talk to your tenants about their plans. If they’re thinking about leaving but you want to keep them in place, you can leverage renovations in order to keep them in your home. Offer a carpet cleaning or a new appliance. Find out if they want fresh paint or a better microwave.
You can negotiate these things when it’s time to renew the lease. Most tenants understand that there will be an increase in rent. If you keep that increase reasonable and you offer a cosmetic renovation for the upcoming lease year, you’re more likely to have a renewal in your hands.
Maybe your tenants want a new mailbox or better windows. Perhaps they’ll request brighter exterior lights or more frequent landscaping. Talk about what they need to stay in place for another year or more.
Renovating an investment property while tenants are in place is not always easy. But, if the renovation is simple, it can be done.
Renovations in your rental property are always a good idea. You earn more money in the short and long term. You keep your tenants happy. You also protect the condition and value of your investment when you’re willing to improve it.
Let’s talk about the renovations your property can benefit from, and how we can schedule the work. Please contact us at North County Property Group for all of your San Diego investment property needs.
